– This is the script of CNBC's news report for China's CCTV on January 7, Thursday.
Welcome to CNBC Business Daily, I'm Qian Chen.
China's central bank guided the yuan lower on Thursday at the fastest pace since its shock devaluation in August, prompting a shuttering of mainland stocks and roiling markets elsewhere.
Let's just quickly recall what happened this morning.
This is what happened in the first half an hour of trade in China.
Markets opened down over 1%.
13 minutes into trade, the CSI 300 extended losses, falling 5% and triggering a 15 min suspension.
At 9:58, the CSI resumed trade, falling 6%.
The Shanghai Comp continued to extend losses, also slumping over 6%.
And at 9:59, the CSI 300 fell 7, triggering the circuit breaker and shutting China markets for the rest of the day.
Which means, in total Thursday, China shares only traded around 15 minutes.
As a result, CSI 300 slided by xx%, and Shanghai Composite ended with a xx% loss.
(FLIP WALL-CCTV FF CHINESE MARKET FACTORS )
From what I've heard from analysts interviewed by CNBC today, here are some possible factors that led the Chinese stock market to trigger the circuit breaker again today.
Currency.
The People's Bank of China (PBOC) set the yuan reference rate at 6.5646 against the dollar, down 0.51 percent from Wednesday's fix, and the lowest mid-point since 2011. That represents the largest daily change in the fix since August 13, according to Reuters data. The yuan had finished at 6.5554 on Wednesday.
The currency moves have revived a litany of concerns in financial markets, from the health of the Chinese economy that is growing at its slowest pace since the financial crisis to the impact of a weaker yuan on capital outflows, which have accelerated in recent months.
The more stocks fall on cues from a lower yuan, the more investors may be encouraged to yank funds out of China and park them overseas, in turn exerting further pressure on the yuan.
CLN SQ BOX 01_07_2016 0900
[JACKSON (t)WONG Huarong International Securities ltd Associate Director] "093318 The yuan RMB is really putting a lot of pressure to the markets. Last year when they firstly depreciated 2%, that sent the market a huge turbulence, and they had to do a lot to fix the calmness level, now 3 days into the new year, the RMB has already depreciated by 2.7%. 093340"
Then, a still-sluggish economic data coming out from China this week.
The worry was further compounded this week after Wednesday's Caixin non-manufacturing Purchasing Managers' Index (PMI), a measure of activity for the services sector, showed a slowdown in the pace of growth.
The country is undergoing a structural rebalancing from a manufacturing-oriented to a service-oriented economy, so services sector growth is a key sign of success. The Caixin non-manufacturing PMI for December fell to 50.2, from November's 51.2. A reading over 50 indicates expansion in activities in the sector.
CLN RUN DOWN 01_07_2016 0600
[TOBY (t)LAWSON Societe Generale Newedge, Head of Global Markets, Australia] "064452 I think, the key for investors to see is transparency and consistency from the PBOC in terms of its decission making, its policies in regard with yuan revaluation, fiscal spending and monetary policy. If we get consistency, investors feel more confident the Chinese authorities are in control of the decline in growth of their economy, i think that's key for investors right now. 064513 "
Some news from the CSRC today...
In light of the early shutdown, China's securities regulator also issued new rules to restrict the percentage of shares major shareholders in listed companies can sell every three months, in an attempt to stabilize markets.
Shareholders are not allowed to sell more than 1 percent of a company's share in that period.
However, again, the new mechanism - circuit breaker - is still heatedly debated.
Jackson Wong, associate director at Huarong International Securities said he was not surprised by how quickly the first trade halt came. He attributed it to the mentality of Chinese investors. If the index is down "close to 4 percent, the selling price will be heavier," he told CNBC's "Asia Squawk Box". "It hit 5 percent in no time."
CLN SQ BOX 01_07_2016 0900
[JACKSON (t)WONG Huarong International Securities ltd Associate Director] "094618 The circuit breaker, in the first place, 5 and 7% in China is very very short. You know, even in the US, the voltility is much less, they set the breaker at 7% then 13% (for a break),sth like that. In China, I think last year, we've already seen more than 20 times of more than 7% for intraday.094641 094722 If they lift to 8%, I think in the whole day, we'll hit one or two times. 094727"
Meanwhile, some relatively bullish expert still see some opportunities in the market.
CLN STREET SIGNS 01_07_2016 1100
[NICHOLAS (t) FERRES Eastspring Investments Investment Director, Global Asset Allocation] "111737 The collapse in equity market, I tend to look at these episodes as potential opportunities, particually when you get to that rapid emotional flights with the market. I mean, we know chinese equities are undervalued, the question is when do you take it on. 111754 111813 If you saw stablization both in terms of price itself and macro news flow which is possible in the next few months, we've seen some of that in macro data in China. That might be opportunity, technically. 111827"
CNBC's Qian Chen, reporting from Singapore.
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CLN STREET SIGNS 01_07_2016 1200
[STEPHEN (t) DAVIES Javelin Wealth Management CEO] "121748 It's very easy to get site-wide big headline numbers from Shanghai, and obviously they are very large, but in reality, do they have a real impact elsewhere, only in so far as its genuing reflection, of the strenth otherwise is the underlying chinese economy. (can we mute Martin's voice here)121803 121808 The A share market is driven by policy action, by momentum liquility.121812"
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CLN CAP CON 01_07_2016 1300
[PETER (t) FAY Invast Australia Director of Research ] "133802 You are correct, Gold has been out of favor, but we think with the geopolitical tention at the moment, then there would be a lot of scope up for the gold price. 133815 "
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